Kenya’s exports to hit Sh1.2tn by 2030 – report

Kenya’s exports are projected to grow at an average annual rate of 7.7 per cent to cross $10.2billion (Sh1.2 trillion) by 2030, Standard Chartered says in a new report. 

According to the repot, this will be driven by among others, output from the manufacturing sector, agriculture and food, textile and apparel and metal and minerals.

Titled 'Future of Trade 2030: Trends and Markets to Watch', the report projects that global exports will grow by 70 per cent from $17.4 trillion (Sh198 trillion) to $29.7 (about Sh338.1trillion) over the next decade.

It lists 13 markets as the drivers for the growth, identifies major corridors, and five trends shaping the future of global trade. 

China, Kenya’s biggest import source, is expected to remain dominant with other markets being the US, India, UK, Japan, Germany, Thailand, Netherlands, Singapore, UAE, Vietnam, South Korea and Philippines.

“The predicted doubling of global trade offers strong evidence that globalisation is still working, despite recent dislocation,”said Makabelo Malumane, head of transaction banking at Standard Chartered. 

In addition to the growth of intra-regional trade pathways, the corridors of the future will still cut across continents.

Kenya’s continued investment in the expansion of the manufacturing and the agricultural sector is seen as a catalyst to increased exports, supported by the strengthening of its regional trade relations.

Pakistan which takes up 70 per cent of Kenya's tea exports, Uganda (manufacturers and agricultural products) and the US (apparel and textile), are identified as Kenya’s key trade corridors.

“Pakistan will be the fastest-growing export corridor for Kenya, set to grow at an average annual rate of 10.7 per cent. Uganda and the USA will continue to be the leading export corridors for Kenya, accounting for 11 per cent and nine per cent of total exports in 2030, respectively,” states the report.

Exports from Kenya are dominated by agricultural products such as tea, coffee, vegetables, and cut flowers.

The agriculture sector will continue to be the mainstay of Kenya’s economy, the report notes, with exports expected to grow due to efforts to improve the sector’s efficiency and increase land productivity as well as growing regional demand.

Kenya has identified textile and apparel as a key sector to drive industrialisation. The garment sector is growing due to increasing Foreign Direct Investments from Asia and the Middle East, supported by the establishment of Export Processing Zones.

Exports of garments have been growing as Kenya benefits from duty-free exports to the USA as part of the African Growth and Opportunity Act (AGOA).

“The research found that 10 per cent of global corporates currently do or plan to manufacture in Kenya within the next five to 10 years,” notes the report released yesterday.

Last year, the value of trade between Kenya and its key business partners grew 26.3 per cent in 2021, as the country made gains on key export markets with Uganda leading.

Kenya National Bureau of Statistics (KNBS) data shows the value of volumes traded in the year to December hit a record Sh2.88 trillion, up from Sh2.28 trillion.

It had recorded a 4.7 per cent drop in the year from Sh2.396 trillion in 2019.

Last year's new high however came with a wider trade deficit which increased by about Sh400 billion to Sh1.4 trillion, according to the latest leading economic indicators, as the country remains import-dependent.

Importers brought in goods worth  Sh2.15 trillion which was an increase from Sh1.64 trillion the previous year, with China being the top source.

Total exports including re-exports totalled Sh738.9 trillion, up from Sh641.2 trillion a year earlier, buoyed by reopening of economies and increased trading activities with key export markets, mainly neighbouring countries.

The report notes African economies such as Ghana, Nigeria and Kenya will continue to drive trade, supported by improvements in the business environment, enhanced regional cooperation and infrastructure investments. 

The report, commissioned by Standard Chartered and prepared by PwC, is based on an analysis of historical trade data and projections until 2030, as well as insights from a survey of more than 500 C-suite and senior leaders in global companies.

Global trade will be reshaped by five key trends: the wider adoption of sustainable and fair-trade practices; a push for more inclusive participation; greater risk diversification; more digitisation and a rebalancing towards high-growth emerging markets.

Almost 90 per cent of the corporate leaders surveyed agreed that these trends will shape the future of trade and will form part of their five to 10-year cross-border expansion strategies.

Strengthening trade relations as a part of its Vision 2030 plan, Kenya is looking to raise the share of its goods in the African regional market.

Kenya was one of the first markets to ratify the African Continental Free Trade Area (AfCFTA).

The aim of AfCFTA is to increase intra-African trade by removing tariffs on 90 per cent of goods and reducing other barriers to trade.